SHI Losses Widen

South Korean Samsung Heavy Industries (SHI) reported its third-quarter net loss of 583.2 billion won (US$ 503.8 million), compared with a KRW80.30 billion loss in the same quarter a year earlier, staying in the red compared with a year ago.

The loss widened sharply in the wake of a cancelled shipbuilding deal. Mitsui Ocean Development & Engineering Co. (MODEC) was recently selected as the floating production, storage and offloading (FPSO) unit supplier for the Barossa Project in Australia. The FPSO part of the project alone is estimated at US$1.5 billion.

Earnings were also hurt as Transocean Ltd. (RIG) said in September a pair of its subsidiaries had cancelled a contract for two drillships already being built by SHI.

SHI continued to post an operating loss of 312 billion won for the July-September period, compared with a loss of 127.3 billion won a year earlier. Sales rose 49.5 percent to 1.96 trillion won, said a report in Yonhap.

According to Business Korea, with the global competitiveness of Japanese shipbuilders on the decline, they are focusing more and more on cooperation with China. As of the end of September this year, the shipbuilders’ order backlog hit a 17-year low of 12.83 million CGT.

Moreover, they received new shipbuilding orders worth 1.96 million CGT for the first three quarters of this year, down 67 percent from a year ago and approximately one-third of those of South Korean and Chinese shipbuilders, the report said.

This year, Samsung Heavy has so far secured orders for 37 vessels worth $5.4 billion, achieving 69 percent of its annual order target of $7.8 billion.